Telco order: 122 licenses at stake, future of sector

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Telco order: 122 licenses at stake, future of sector

A two-judge bench of the Supreme Court is expected to pronounce its order on the petition seeking cancellation of as many as 122 telecom licenses issued in January 2008 by former telecom minister A Raja. The order is expected by Friday.

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Excerpts from After the Bell on CNBC-TV18 Watch the full show »

A two-judge bench of the Supreme Court is expected to pronounce its order on the petition seeking cancellation of as many as 122 telecom licenses issued in January 2008 by former telecom minister A Raja. The order is expected by Friday.

Siddharth Zarabi, economic policy editor at CNBC-TV18 says that this order will be very important for the entire telecom sector. Remember, this is the fate of 122 telecom licenses that were issued by A Raja on the January 10, 2008 that encompasses big names and a lot of big promoters are involved such as DB Realty , Essar and Datacom which is now owned and promoted by Videocon . The plea was basically that the system of allotment was not as per procedure, that many of these companies had jumped the queue, violating the first-come-first-serve process, and that the entire way of allotting these licenses had been fixed in a manner to benefit a select few.

The hearings for this matter were concluded almost 9-10 months back on the March 17, 2010 and the order is now expected to dwell upon whether the procedures were followed correctly and whether in the grant of these licenses, proper and fit procedures that had been laid out by the DoT were followed.

A Raja has stepped down, the DoT secretary has also been named in the charge sheet, but clearly, the big order will specify what is going to happen to these licenses. There are complications in the sense that these licenses were sold, at least part of their equity was divested of the operating companies to foreign operators, including companies from Norway. So, all of that together will really mean a very big day for the fate of these licenses either way the order goes. The telecom sector will likely see consolidation as a result of this in the forthcoming months.